Key Account Management (KAM) is an essential software tool that will help you secure clients and propel ahead of the competition. It’s no secret that not all accounts are created equal, some are simply more valuable than others.
The fact is, the top 20% of your accounts are going to represent 80% of your total revenues. Because of this, it’s imperative to nurture and grow those special relationships with a software solution that was designed to do so.
KAM helps you prioritize your top 20% of accounts, promoting expansion and driving growth. It doesn’t make sense to treat all accounts equally, especially when some aren’t carrying their own weight. It’s your job to know which accounts are making up the majority of your revenues so you can understand who they are, what problems they have and how you can help effectively solve them.
While losing one small account may be insignificant, losing one large account could be devastating. KAM is there to make sure that doesn’t happen.
What’s More Profitable: Acquiring New Customer or Selling to Existing Ones?
Acquiring new customers is important and you should always strive to build up your portfolio, because diversity is a major key to mitigating risk. This you already knew. But, you probably didn’t know that it’s much more profitable to sell to your existing clients instead of focusing your efforts on acquiring new ones.
First, existing clients already know the value you bring to the table. They trust you, you trust them. Generating new business and attracting new clients can get expensive when you compare it to the cost of selling to a current customer.
Most organizations will end up spending six to four times more in an effort to acquire new clients. These high costs come from the resources it takes, like: advertising, sales resources, commissions, etc.
Secondly, you’ve probably been working with your clients for a long time, making them much easier to service and satisfy. In turn, they will cost you less. The two of you understand each other, your goals, priorities and preferences.
Building a relationship like that takes time, which costs money and valuable resources. But once it’s all said and done, you have created a loyal customer who is more cost efficient and cost effective to service than a new one.
Thirdly, referrals. That’s the name of the game. The loyal clients who trust you and have worked with you for a long period of time are more likely to refer you to other businesses. And that’s what you want, that’s the cheapest form of marketing – Unbiased, word-of-mouth referrals. They are gold to your business, because other companies know that your clients have no ulterior motive.
Lastly, existing clients pay better. It’s simple, your long-time clients know that you deliver a quality product or service and are comfortable with paying you what your efforts are worth. New customers… not so much. Most likely you’ll need to pull them in with special “deals” and “discounts”. No new client is going to trust you the way that your existing ones do, building trust costs money.
Your CRM Software Won’t Cut It
Many organizations feel they don’t need a KAM, because they already have a CRM software in place. But did you know that your CRM software can’t help you when it comes to key account management? It’s true. It’s not that your CRM software is useless, it serves well for what it was designed to do.
CRM’s were designed to focus very strongly on efficiently managing the sales process. By providing key metrics and accurate data, CRM systems help your business convert potential leads into paying customers. Meaning, the main strength of a CRM system is in managing sales opportunities and acquiring new clients.
This can be a great asset for your company, but a CRM’s strong focus on new client acquisitions means that little-to-no energy is spent toward building long-lasting relationships with existing customers.
KAM solutions are the exact opposite, their main goal is to help you build strong relationships with your best and most valuable clients. Unlike a CRM system, which sees clients as only an “opportunity”, KAM solutions encourage a more holistic approach.
KAM software gives you an in-depth overview of your clients and their unique, specific needs. It does this by capturing highly-personalized data on each client. If you are an account manager, key information about your client’s goals and new insights into their unique obstacles is the greatest weapon for effectively building and maintaining a strong, healthy relationship with the clients who matter most.
Choose What’s Best for Your Clients
Key Account Management provides you with the most effective, profitable management of your most valuable clients.
To effectively run an organization and stay ahead of the competition you need to arm yourself with the perfect set of software solutions, ones that promote expansion and drive growth. While it’s convenient to think that your CRM software can fight the whole battle for you, it’s just not the case – not if you want to win.
CRM’s serve a special purpose and they are good at what they do. Unfortunately, they were meant to help you acquire new customers, not strengthen your relationship with existing ones. That’s what KAM is for.
Numbers never lie and the numbers say that its four to six times more profitable to spend resources on developing stronger relationships with existing customers than on acquiring new ones.
KAM will undoubtedly become one of your organization’s greatest assets, as it helps you efficiently and effectively manage the accounts that matter most. By focusing on that top 20% and prioritizing on creating a successful sales cycle for existing clients, your business will save more, make more and grow more.